The original blog from IndiaThink Founder Brandi Moore...for more visit IndiaThink.com

November 12, 2007

Raging Rupee

Last time I was in India the exchange was 46 Rupees to 1 dollar. Today its 39 to a dollar. As the dollar continues it plunge into never never land the impact on exports from India is large.

Washington Post featured an article about this on Friday Nov 11th. In the piece they site numbers I have not uncovered before that I will share here:

Hardest hit exporters are those garments, leather goods, handicrafts.

Information technology sectors have also been hit.

Job losses thus far are estimated at 4 million people with the expectation that 8 million will be effected by March 2008

The focus of the piece is an owner of a garment producer who creates pieces for Ralph Lauren, Ann Taylor, Liz Clairborne etc. His concern is around where the work will go next if the Rupee "rages" on. Cambodia, Thailand?

What many of us may not know is that the garment trade in India is belabored by "Ghandi" laws that prohibit imports of particular materials making it very difficult for India to compete in any other space but these high end pieces. They are not able to import the volume of cheap fabrics in the same way that China is resulting in silks and high end cotton pieces being India's niche market.

Is India about to go through a similar transition to the US where people will have to find jobs outside the unskilled positions because they will eventually be moved to other locations? The rule of globalization is everything speeds to the cheapest market available. The question then becomes will India spend its raging Rupee on infrastructure to build schools and other necessary items to accommodate these society changes?